The video game business, whether on mobile phones, consoles or PCs, has been booming since the Corona pandemic. However, the German developer scene only plays a small role internationally.
40 million US dollars in total prize money – that went to the best gamers in the world’s most highly endowed eSports tournament to date. While a few years ago the public was shocked by winnings in video game tournaments amounting to millions, today prize money in the seven or even eight-figure range is no longer uncommon.
Gaming is a billion-dollar market worldwide. The industry’s turnover in Germany has been growing strongly for years; most recently it was around ten billion euros based on games, hardware and services. This is what figures from the game industry association show: an increase of six percent. And this despite the fact that the number of games sold has actually fallen. But this is made up for – also by the fact that games have become more expensive in recent years.
Last year’s sales of game consoles and accessories were probably driven up by the fact that many people had some catching up to do. Because during the pandemic, far too few devices came into stores due to production and delivery difficulties. For example, it was only after a long wait that popular game consoles such as the Playstation 5 were sufficiently available again.
German developers have little success
Germany is the largest computer games market in Europe. Internationally, however, it is rather unimportant because international manufacturers also dominate the domestic market: less than five percent of Germany-wide sales of computer games go to German developers.
“We have a gaming industry, a gaming world. There is a cluster in Berlin, Hamburg and also Munich, but we are very medium-sized,” says analyst Mirko Maier from Landesbank Baden-Württemberg (LBBW), who has a lot of knowledge the industry and AI. “Microsoft is one of the biggest players in the gaming market. And then there are other players like Tencent in China, who are very strong in mobile games.”
Germany only plays a tiny role internationally
The USA, China, Great Britain and Canada are giants in the gaming market compared to Germany. And the companies that develop games know this too. The German games industry fears that it will fall even further behind internationally due to a lack of government support.
Maier also says the funding situation could be improved. “The small companies that have a great game idea take a lot of risk – whether the game will be successful or whether it will flop.” The analyst believes that this needs to be supported a little.
Politically, however, the signs point in the opposite direction. The federal funding for the gaming industry has now become smaller. To this end, the Ministry of Economics wants to withdraw from funding small computer game developments. “We cannot compete internationally like this,” writes the game industry association on its own website.
There is no way around the gaming industry
But gaming is no longer just a leisure activity. Lutz Anderie is an expert in the gaming industry and teaches business informatics at the Frankfurt University of Applied Sciences. He says gaming acts as an indicator for other industries.
“What you see in the games industry today, you will see in concrete applications in other industries tomorrow. Surgeons are trained today with virtual and augmented reality.” Anderie is convinced that companies can no longer ignore the gaming industry. Younger target groups can no longer be reached through traditional retail or e-commerce.
What is particularly interesting is the development of games that can be downloaded for free. “Monetization, i.e. economic success, is then realized through the sale of so-called in-game items,” says Anderie. This means that more and more purchases are being made within the games. So if you want to be competitive, you have to spend real money in many games to buy better equipment or players. And this is often done via a virtual treasure chest – so-called loot boxes: one click, pay and the box opens. Only then will you know what you spent your money on.
Loot boxes are controversial
These boxes are a controversial topic. Sometimes players spend several thousand euros to get better tools, players or levels. In extreme cases, this can even result in gambling addiction. However, it is legally and politically controversial whether loot boxes are really gambling or not. Consumer advocates and experts have been warning about the danger of loot boxes for a long time; it is about protecting young people.
In Germany, virtual treasure chests are not officially considered gambling because, unlike other games, such as lottery, they cannot ultimately bring players a larger amount of money. You get equipment in the game for the money. However, there is also a dispute about the interpretation because much of the content from these boxes is traded on the black market, where considerable sums are sometimes paid. Germany’s neighboring country Belgium has long since reacted – loot boxes have been considered illegal gambling there since 2018.
Learn from the games industry
Gaming expert Anderie says that, in principle, many areas could learn from the gaming industry. We are talking about user behavior. “When does the buyer or gamer make a decision about a product and what happens during the purchase decision process?” The findings could also be used in retail, for example, says Anderie. “Large supermarket chains, for example, have long since discovered this market for themselves and are stepping up to the plate as sponsors of computer game tournaments or gaming teams.”
The gaming industry was one of the winners during the corona pandemic. In the meantime, however, the hype has died down somewhat, as the current sales figures for games and hardware show. Investors keep holding back, projects are canceled, development studios are closed and employees are laid off. Developing new games takes staff, money and time. Fans fear that there may be no big blockbusters in the gaming sector in the near future.
Melanie Böff, HR, tagesschau, May 8, 2024 2:51 p.m